Dow slumps triple digits as Treasury yield curve inverts (recession indicator)

MarketWatch.com (by Dow Jones) ^ | 12/27/05 | Tomi Kilgore

[SierraWasp]

Oh my... Those FRustrated FReepers!!! Ha Ha Ha!!!

Here tis, Dog Gone! I fergot ta Ping ya!!!

[SolidSupplySide]

the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis.

That is objectively false. There was no recession in 1988.

[Mase]

..the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis.

In the last 30 years, the yield curve has had to invert by two percentage points or more for a recession to occur. I haven't seen anyone predicting that kind of inversion as yet.

[SierraWasp]

"There was no recession in 1988."

The article didn't say "1988!" It said 1998!!!

[demkicker]

and paying off Santa...

[EQAndyBuzz]

"If they hadn't overreached in their raising of short term rates, there wouldn't be a yield curve inversion."

I hate it when the yield curve inverts.

[SolidSupplySide]

The article didn't say "1988!" It said 1998!!!

I assert that there was an inverted yield curve in December 1988, and no recession. The article says that 1998 was the only time that there was inversion with no recession. I say that isn't true.

[SolidSupplySide]

In the last 30 years, the yield curve has had to invert by two percentage points or more for a recession to occur.

The last time we had inversion by two percentage points or more was 1980.

[RightWhale]

They are about done raising rates. The power range is 2-5%, which is where they are. If the economy turns south, there is room to lower rates for a couple years. But, it is time for mortgage lenders to start making some money.

[xrp]

I hate it when the yield curve inverts.

You were in a 4G, inverted dive with a Mig-28?

Yes ma'am.

*cough* bullsh*t! *cough*

[SierraWasp]

That sounds good. I have a hard time puttin my faith in some of these "technical indicators" since the market is so heavily weighted with emotionalism and so many new and uninitiated investors these days!!!

Some of these are just turning into old liberal Democrat wives tales, I think.

[antaresequity]

Not a single Bear on the board...

And most if not all of you 'blamed' the selling on 'tax loss', 'profit taking', 'bond markets'....etc etc etc...Anything but the stocks themselves...

All Bulls and one Bear (Me)....

I feel even better about my Cash, and Net Short Position...he eh...

When you guys are saying 'this market sucks', 'I think I will short some stock', 'I am going to get some more Puts'...I know it will be time to reverse...

[jwh_Denver]

I think the $3K limit on capital losses/yr doesn't apply.

That's the one I forgot about. I've had 400 ins and outs this year and I have to find a CPA or tax consultant who knows daytraders, swing traders, so I can get this mark to market for next year. The guy I had do them last year didn't even mention them. Later I heard about it in an investor's chat room. Thanks for the info. I'll go read the IRS bulletin so I can get really informed! sarc extremely on.

[Cyber Liberty]

ARRRRRRRRRRRRRRRRRRRRGHHHHHHH!!!!!!!!!!

[SierraWasp]

Oh! I see!! I apologize for misunderstanding what I thought was your typo!!!

[ex-Texan]

View the chart posted on my # 106 and read my # 99 on this thread. The treasury yield curve is not inverted. The curve is flat for the first time in five years. But it may be inverted early next month. An inverted yield curve is only one sign of recession. The are some others that the MSM have not focused on yet. Watch the news very closely. Over 800,000 real estate related jobs are at risk; if they are lost when the real estate bubble collapses, watch out. The bubble just popped in Boston.

http://www.freerepublic.com/focus/f-news/1547701/posts?page=106#106

[ex-snook]

Where are those guys who were predicting 11000 a few weeks ago - Their wind done gone.

[Mase]

The last time we had inversion by two percentage points or more was 1980.

I pulled that number from an article from the WSJ today. Do you know what the amount of inversion was during 1991-92?

[pleikumud]

High demand for longer term bonds (particularly by foreigners) reduces yields.
Government using more short term borrowing.
Very strong economy, low inflation.
Inversion not a big deal.

[Moonman62]

It has to be inverted for more than a few days and by more than just a few hundredths of a point. I believe 7 out of the last 8 recessions have been preceded by an inverted yield curve. It's a great indicator because it shows how out of control and determined the Federal Reserve is to cause a recession.